Demystifying Escrow Accounts

Demystifying Escrow Accounts

If you are closing on a home or refinancing, there’s a good chance you’ll come across the words “escrow account” or “impounds” numerous times.

At the most basic level, an escrow account is a savings account that is funded at closing and maintained by your lender so they have funds to pay the property taxes and homeowners insurance for the property they are lending on.

Funds in the escrow account are kept current by the borrower paying into it each month. A portion of every mortgage payment goes into the escrow account, so sufficient funds are available to pay the taxes and homeowners insurance premiums when those payments come due each year.


The mortgage company wants their asset to be protected. If they can make sure that the taxes are paid and the property is properly insured, their investment (the real estate) is better protected and there is less risk that a tax lien results on the property and/or there is property damage to the home while it’s uninsured.


Many homeowners like having an escrow account because, as explained above, it acts as a kind of savings account for these larger bills that must be paid annually for you to continue owning your property. Instead of having to stroke a check when the taxes are due, you just let the lender pay the taxes for you. This way, if you budget to be able to afford your monthly mortgage payment, you will in essence be saving for your tax bill and homeowners policy premium simultaneously.


Depending on the size of your home, the amount of funds in your escrow account is not insignificant, particularly right before one of the bills is due to be paid. Some homeowners dislike the lender being able to make interest on their money in escrow when in theory, that money could be making the borrower interest instead.

Escrow accounts are typically maintained by servicing companies. While not all bad, sometimes servicers make mistakes when handling your escrows. Homeowners tend to dislike having to work with a servicer to sort out escrow issues, which can be anything from an improper overage issued to the borrower, to a missed payment altogether.

Servicers are imperfect, like anything else. By and large most work to efficiently pay your taxes and insurance, but it never hurts to double check behind them. Contact your insurance company to confirm they’ve received payment each year. You can also search the property tax records to verify that the county/local entity where your property is located received payment for the property taxes. Most counties maintain this public information online.

Can I get rid of my escrow account?

The short answer is yes, but it will cost you. Lenders typically require an escrow account be established at closing as a portion of the borrower’s monthly mortgage payment if they are putting less than a twenty percent (20%) down payment on the property. Even if you meet the down payment requirement, some lenders will require the borrower to pay an escrow waiver fee, and/or they may charge a slightly higher interest rate if you choose to forego escrow.

Read the fine print and discuss in detail with your lender the costs (if any) associated with waiving the escrow requirement.

Why does it look like I’m being charged twice for escrows?

A common question I get at closing is why the escrow “closing costs” are so high. It also can appear that borrowers are “being charged double” for escrows as well. This is for several reasons.

First – homeowners insurance premiums are paid in advance. There is typically a 12-month premium that is collected and paid at closing to the insurance company to insure the property for the upcoming year.

Second – property taxes in the Carolinas are paid in arrears. This is the opposite of the insurance. The amount of funds deposited in the escrow account for property taxes will depend on when you close. For South Carolina, the property tax bills come out in October. In North Carolina, the property tax bills come out in late July/early August.

As an example, if you close in the month of August on a SC property, your lender is typically going to collect 11 months worth of property taxes as part of what is called the “initial escrow payment at closing” on the buyer’s Closing Disclosure. Why eleven months? Well, a closing in August typically results in a first mortgage payment due in the month of October, which is the same month that the current tax bill comes out. So that will be one more payment for the taxes, which brings your escrow account to 12 months, or a full year’s worth of property taxes in the account so that the lender can pay the bill once it is received.


Understanding escrow accounts in general and as they apply to your particular property will help ensure a smooth closing process with your lender and your closing attorney. As mentioned above, more expensive real estate requires that higher amounts be escrowed, so it’s important to take the monthly escrow costs into account when determining what real estate you can afford to buy and maintain.

The Real Estate Information Gap

The Real Estate Information Gap

As a closing attorney in Fort Mill, South Carolina I have the privilege of working with a lot of families every single day. Individuals are relocating to the Carolinas for a variety of reasons – a new job, lower taxes, better climate, proximity to grandchildren, the list goes on! People are starting new chapters to their lives, and I am honored that I get to play a part in their real estate purchases and sales.

Now that we’re another year removed from the pandemic, everyone knows the real estate market is competitive. Inventory is low! There are a myriad of moving parts, details, terminology, as well as different industries involved in a real estate transaction. To break it down briefly, most individuals work with a lender, a real estate agent, and a closing attorney and/or title company to facilitate their closing.

The lender, which can be a banker, loan officer with a mortgage company, or a broker, is the entity that provides the financing for the transaction. They control the terms under which they will lend money – known as a mortgage – to a borrower to purchase real property. Mortgage lenders will almost always insist on retaining a security interest in the house being purchased as collateral for their loan.

The real estate agent or REALTOR is the licensed professional that is qualified to sell you the property you want to purchase (confusingly known as a “seller’s agent” or “buyer’s agent”) or sell (known as a “list agent”). Most realtors have access to the properties you want to view in order to determine if you want to buy it, and are typically knowledgeable of the neighborhoods, communities and cities in which they work and where their clients want to live.

And then there is the closing attorney and/or the title company. Closing attorneys are required to supervise and conduct real estate transactions in South Carolina, and while title companies can handle them in NC, the requirement is essentially the same there as well. Other states have title companies handle real estate transactions, so it’s always important to research the laws of the jurisdiction in which you are considering a real estate purchase. The closing attorney prepares all of the legal documents needed for a real estate transaction, handles all of the funds for the parties and the lender, and ensures the signing ceremonies are conducted properly and in compliance with state law.

Aside from the delightful families who I get to meet at closings – the best part of my job is the collaboration that takes place between my office and our realtor and lender partners. In order for a transaction to feel effortless and smooth for a buyer or seller, strong communication is key throughout the entire process, from signing the contract until disbursing of the funds. Educating the clients as they move through each step of the transaction is crucial to their understanding.

Real estate is as busy as ever, and I am truly living out my dream job each day. This calling has led me to want to serve my clients and partners at a higher level. And it’s led me to the discovery of this problem that nobody in the industry wants to talk about. That problem is the information gap that exists in the industry.

The reason that collaboration is the best part about my job is in part because it is so important. And if that communication breaks down or education of process by any of the industry partners is missing, the clients suffer. It certainly is heartbreaking when I have buyers sit down with me at a closing to buy a house, and it becomes evident that they haven’t had that education along the way.

I understand how the industry works, as it is a business. Lenders, realtors and closing attorneys all operate on a volume basis. There will always be pressure to work efficiently so as to serve as many clients as possible. There is nothing wrong with growing a team and having ambitious goals to reach more clients. But the high volume of work cannot come at the expense of skipping steps or failing to educate each and every client so they can make informed decisions.

As a subset of this communication gap is the uncertainty as to whose role it is among the industry partners to explain what to the client. Some items are clear-cut. Certainly a realtor should not be practicing law and a closing attorney should not be examining a borrower’s credit to determine the amount they can borrow. Those are easy examples. Other nuances of the industry involve a lot of overlap, and it’s not so clear as to who should carry the responsibility of educating the client on the matter.

That’s where Johannesmeyer & Sawyer, PLLC comes in. Rather than “passing the buck” so to speak to another industry partner, this blog will lean into the topics that every buyer and seller of real estate should understand. As a closing attorney, I’ve got a good grasp on the legal aspects of the real estate transaction. Beyond what can be learned in a textbook, I’ve had the benefit of conducting an average of 4-5 residential closings a day for over four years, and I’ve heard the common questions that come up time and time again from our sellers, buyers, and refinancers.

The goal of this blog is to decrease the information gap, one post at a time. And the intent is to be collaborative. When appropriate I’ll have realtor and lender partners co-author a piece so that we can fully capture the collective expertise of the industry. The end result will be a rich depository of topics that buyers, sellers, realtors and lenders can all access, for free. Equipped with more information and knowledge, parties can more effectively carry out their real estate transactions.

I hope you will join me in this effort to provide accessible knowledge to facilitate more informed real estate transactions in the Carolinas, and beyond.

Don't Forget About Your Furry Kids in Your Estate Plan

Don’t Forget About Your Furry Kids in Your Estate Plan

Make sure you take care of your fury kids, too. Trust provisions are an easy way to make sure every member of your family is covered when something happens to you.

If you have kids, chances are your will has some basic trust provisions for them – if both parents are gone, the trust provisions cover the things like healthcare, education, and putting food on the table and roof over their head. Your will also has guardian provisions – who is going to take care of your kids if you’re no longer around.

If you have kids under the age of 18, and you don’t have a will, then drop everything and get this taken care of now. I’m happy to help – just shoot me a message or email me at to get the ball rolling.

But what about your furry kids? If your family’s relationship with pets is anything like mine, then the fury kid is probably the true first kid in the family. Yep. Katie and I got Cinder a good 4 years before Tripp showed up.

Cinder is as much a part of the family as our 3 kids. All of us know someone (or have had to go through the process) of putting a beloved family pet to sleep. It’s heart-breaking – like losing a member of the family. So why shouldn’t we provide for them in our estate plan?

Unfortunately, the law treats pets like personal property. In other words, the law doesn’t see any difference between Cinder, our dog that’s been with us for 12 years, and my golf clubs. You’ve made sure your human kids are covered. You should probably make sure your fury kids are covered. And mind you – I’m not discriminating against reptiles, birds, or any other pet that doesn’t have fur. In fact, if your family pet falls outside of your standard dog or cat, then it is even more important to take care of the pests in your estate plan.

How do we do it? Well, you have trust provisions for your kids. Why not have trust provisions for your pets? A pet trust. We’ve all heard about the lady who left tens of thousands of dollars to her cat. Same idea – but we’re not actually giving the money to the cat, or dog, or snake, or whatever. We give the money to someone who will take care of the pet; just like we set aside money for someone to take care of our kids.

You shouldn’t take it for granted that someone is going to volunteer to take care of your pet when something happens to you. Pets can get expensive quickly. One estimate shows that the pet care industry could reach almost $100 billion annually by 2020. This should come as no surprise, but there are veterinary specialists just like there are specialists for humans. There are neurologists for dogs; oncologists; therapists who prescribe Prozac type drugs for pets who have anxiety issues.

And here’s the problem with assuming someone will just show up: if no one steps up, then your fury kid is going to the pound / animal control. And if no one adopts them, well…

So here’s what should be included in your estate plan for your pets: designate someone to take care of the pet. Make sure this person is cool with adopting your pet.

Put pet trust provisions in your will. It doesn’t have to be anything complicated. Set aside a certain amount, and then give the person who will be adopting your pet the authority to use the funds to take care of your fury kid. You know – food, shelter, vet bills, trips to the doggie spa. All the necessities.

We do pet trusts for our clients on a regular basis. If you already have a will, but there’s no pet trust provision in there, we can still update your plan without having to reinvent the wheel. A simple codicil (amendment) to your will solves the problem.

So, to wrap it up – make sure you take care of your fury kids, too. Trust provisions are an easy way to make sure every member of your family is covered when something happens to you.

This is Bobby Sawyer. I am one of the owners of helm and Johannesmeyer & Sawyer. We’d love to help you make sure you have a comprehensive estate plan in place. If you’d like more information on what we do, send me a message on Facebook; email me at, or find us on the internet. Helm is our online law firm –, and Johannesmeyer & Sawyer is our traditional law firm –

Watch Out for Wire Fraud When Buying and Selling Your Home

Watch Out for Wire Fraud When Buying and Selling Your Home

This is a great video with very important tips on avoiding wire fraud when you’re buying or selling your home:

Protect Your Money from Wire Fraud Schemes When Buying a Home

Incorporating Faith and Values in Estate Planning

Incorporating Faith and Values in Estate Planning

For many, passing along religious beliefs and values to the next generation is just as important as passing along financial wealth and tangible assets. Estate planning creates many opportunities to do this, including:

End-of-Life Care
A health care power of attorney (Advance Directive in some states) lets you name someone to make medical decisions for you in the event you cannot make them yourself. This can be someone who shares your faith and values about end-of-life issues or someone who will honor your wishes. In either case, it is a good idea to provide written instructions about things like organ donation, pain medication (some may want to remain conscious at the end of life), hospice arrangements, even avoiding care in a specific facility. A visit by a priest, rabbi or other member of clergy may be desired. Pregnant women may want to include their preference on medical decisions that would impact the mother and her unborn child.

Funeral and Burial Arrangements
Faith can influence views on burial, cremation, autopsy, even embalming. Faith may also influence certain details in a funeral or memorial service. Some people pre-plan their services and include a list of people to notify (which can be helpful for a grieving family). Some even pre-pay for the funeral and burial plots to prevent their loved ones from overspending out of grief and/or guilt.

Charitable Giving
Giving to others who are less fortunate is common among people of all faiths. Making final distributions to a church or synagogue, university, hospital and other favorite causes will convey the value of charitable giving to family members.

Distributions to Children and Grandchildren
Taking the time to plan how assets are left to family members lets them know how much they are loved, and is another way to convey faith values. For example, providing for the religious education of children and/or grandchildren speaks volumes. Parents of young children can select someone who shares their religious views to manage the inheritance. A letter of instruction to the guardian can include views on the care and upbringing of young children, which are often influenced by faith.

If the children are older and a son- or daughter-in-law is not fully trusted, an attorney can assist with providing for a son or daughter in a way that will prevent an inheritance from falling into the wrong hands. However, making an inheritance conditional or disinheriting a child or grandchild who marries outside the faith or doesn’t share their parent’s faith can backfire. We cannot really force someone to believe as we do, and trying to do so by withholding an inheritance will only create discord in the family and may not be recognized. The emotional scars on the family, especially if a bitter legal fight results, are probably not what parents want for their family.

Transferring faith and values to family members is best done over time, by letting them see your faith at work in your life, taking them to religious services, and letting them see you being charitable. But it’s never too late. Talk to your family while you can. Explain what your faith means to you and how it has helped you through difficult moments in your life. You can also write personal letters or make a video that they can keep and review long after you are gone.

What Should You Do?
Bobby Sawyer offers clients a No Hassle Trust and Estate Strategy Meeting, where they get experienced guidance on how to achieve total asset protection, long term security, and peace of mind for themselves and loved ones. If I’m not the right attorney for the case, you have my commitment that I’ll point you in the right direction. Just call my office at 803-396-3800 to schedule.

The Right Reasons to Start Your Own Company

The Right Reasons to Start Your Own Company

Recent market conditions have produced a bumper crop of startups and venture capitalists. Not enough thought is given to the questions: Which of them will survive during leaner times? Which of the thousands of startups will actually generate profit? A disturbingly large number of startup founders are more concerned with valuations and term sheets than creating a useful product. Too many venture capitalists are rushing into deals without performing proper due diligence. Groups who’ve never shown interest in venture capital are suddenly jumping into multi-million dollar investments. Many are motivated by fear of missing out on the Next Big Thing rather than a rational evaluation of a business’s earning potential.

Every aspiring entrepreneur should carefully reflect on their reasons for wanting to start their own business before quitting their day job, committing their savings to their new venture, and chasing after Series A. While there’s nothing wrong with desiring wealth, autonomy, and freedom from having to deal with a boss or a job you dislike, these things won’t be the driving force behind your startup’s success. In order to persevere through the hard times and achieve success over the long term, you need to have the right motivations.